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Franklin Roosevelt enjoyed regaling friends with his father’s adage that “Not all Democrats are horse thieves. But all horse thieves are Democrats.”

To be sure, not all Republicans are lunatics. But most promoters of public-policy snake oil are Republicans or their Tea Party and libertarian fellow-travelers.

The latest idiocy to emerge from this swamp is a fervid desire to return to the gold standard, in which all currency is backed by gold reserves. This is a straight-up gambit by the GOP to destroy Washington’s ability to exert what control it can over the economy, and severely constrain government’s ability to promote economic growth.

The GOP, in its deliberations this week in Tampa, made no secret of its determination to dismantle the modern, successful welfare state. The provisions of the GOP’s intended demolition project are codified in the GOP platform, and in the past several years of budget proposals by Paul Ryan. The Wisconsin congressman, who makes The Fountainhead mandatory reading for his office staff, is the GOP’s longtime economic policy guru and lately Mitt Romney’s running mate.

The GOP has included in this year’s platform a proposed commission on the wisdom of returning to the gold standard.

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Ryan himself is too smart to speak of a revived gold standard, which suffers a lingering “barbaric” reputation among economists. In a recent poll cited by University of Chicago professor Richard Thayler, noted in the latest Atlantic, not one economist endorses a return to the gold standard.

What Ryan has done instead, clever fellow, is recommend in a Wall Street Journal op-ed the functional equivalent of a gold standard. Ryan’s currency would be backed by a “basket” of goods. Presumably these would include gold but also oil, soybeans, pork bellies, sugar, and Slushie futures.

Ryan, absurdly credited by a complaisant U.S. news media with economic savantry, doesn’t grasp (or care) that a greenback tied to commodities would be hugely volatile. That’s precisely opposite the assurance of price stability claimed by the gold-standard advocates. As every motorist knows, pump prices change by the hour and for no apparent reason. And in the 12 years ending 2011, the gold price has soared 618 per cent.

Which means a “new” Fed would be wholly occupied with stabilizing a dollar backed by this commodities basket, whose contents would gyrate daily in price. That effort to protect consumers and business from chaotic volatility in prices, and prevent global runs on the U.S. dollar, would require the Fed to give up its current dual function of controlling inflation and spurring economic and employment growth.

So much the better, say the gold-standard proponents. Government should get out of the money business. That task can be turned over to speculators in the Chicago pits. And promoting economic growth and job creation can be outsourced to a Corporate America last heard from in vapourizing $8 trillion in homeowner equity. In emergencies, the “new” Fed would have to buy stronger foreign currencies to meet America’s financial obligations. That of course would inflate rather than reduce the national debt.

“The libertarian monetary proposals are a prescription for disaster on a scale we can’t even imagine,” Christopher Mahoney, former vice-chairman of Moody’s Investor Services and self-described “God-fearing Republican,” writes in Project Syndicate.

Yet, most of the hopefuls for the GOP presidential nomination this year lent tacit or overt support to a gold standard that was scrapped 41 years ago. And state legislators in Georgia, Utah and Montana, among others, have recently flirted with gold as payment of public debts.

The object of these mountebanks is to disembowel the federal government, by gutting a Fed that would no longer be able to adequately finance government. And gutting the Fed would be achieved by the expedient of bringing back the gold standard.

There are some problems here, chiefly that the efficacy of a renewed gold standard would compare favourably only with the use in medicine of leeches and lobotomies.

A return to the gold standard is wildly impractical. Requiring the Fed to hold gold in equal amount to currency outstanding would force it to set a fixed price at which it would exchange currency for gold. Set the price too high, and monstrous inflation would result. Set it too low, and the result is the even greater catastrophe of deflation, the defining malaise of Japan’s 20-year-long economic stagnation. Just as one cannot time any financial market with precision, so it is with fixing gold at a price deemed ideal.

The gold standard simply doesn’t work to ensure economic stability and fiscal prudence, its advertised virtues among its Tea Partier and GOP advocates. The gold standard was in place during the massive run-up in U.S. government spending in the New Deal, the Second World War, and the 1960s creation of Medicare and other entitlement programs that Republicans incorrectly insist are unaffordable. The gold standard was also in place during the frequent bank runs and financial markets “panics” of the late 19th- and early 20th centuries.

An emasculated Fed could not have curtailed the latest global financial crisis. America would no longer have a lender of last resort — a model that exactly zero countries would emulate. In response to the Wall Street collapse of 2008-09, the Fed would not have been able to scare up the huge quantities of the yellow metal required to back its multitrillion-dollar injection of liquidity into the U.S. economy to prevent a Great Recession from becoming a second Great Depression. And the U.S. jobless rate today would be in the 30 per cent range instead of its current 8.3 per cent. “Precipitating a depression [is not] the most expeditious way of cleansing bank and corporate balance sheets,” U.S. economist Barry Eichengreen has written in warning against a gold standard redux.

Yet crippling the economy in order to save it is what the GOP has in mind if it is honest about its stated goals. This acute lunacy won’t manifest itself under a Romney administration. But a Romney victory would ensure a prevailing hostility toward the Fed’s indispensable role and to government efforts at cushioning the blow to Main Street from the latest failure of capitalism. And that would provide cover for the counter-productive austerity that has already hobbled attempts at recovery in both Europe and the U.S., and further legitimize “tough love” imposed by governments from Ottawa to London to Beijing.

Republicans in Tampa this week invoked cherished values of freedom, patriotism and self-reliance. But what they stand for is anarchism. The sooner the GOP grasps this, and reinvents itself for the 21st century, the sooner America can get on with claiming a second century as its own.

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